The Motley Fool: Buying into bankruptcy?

Q: A company I’m interested in has filed for bankruptcy protection, and its stock has crashed. Would it make sense to invest in it now, at a low price? — G.C., Warsaw, Indiana

A: No, no, no — for a variety of reasons. First, a company filing for bankruptcy is a company in trouble. Why invest in that? When a company files for bankruptcy protection, it typically gets some time to reorganize and to try to pay off its creditors as much as it can. It might sell off some assets to pay holders of its secured debt, and it might negotiate with holders of its unsecured debt — perhaps offering less than what’s owed, and maybe also offering shares of newly minted stock.

In most bankruptcies, holders of the company’s common stock end up with little or nothing, with their shares of stock essentially discontinued. Many companies emerge from bankruptcy with new shares of stock, leaving the old ones worthless (or nearly so).

Q: I know that Google (now part of Alphabet) owns YouTube. What other businesses or brands are parts of other companies? — T.S., Norwalk, Connecticut

A: There are far too many to name, but here are some examples: Google also owns Nest and Fitbit, while Microsoft owns LinkedIn and Activision Blizzard; Amazon.com owns Whole Foods Market, Ring and Zappos. PepsiCo owns Quaker Oats and Gatorade. Comcast owns NBCUniversal and DreamWorks Animation, and Meta Platforms owns Facebook, Instagram and WhatsApp. Warren Buffett’s Berkshire Hathaway owns Dairy Queen, Fruit of the Loom, See’s Candies, Pampered Chef, GEICO and the BNSF railroad.

To find out about any particular company (or division or brand), you can check out its website, search online or even call it and ask.

If you’re saving for retirement, as most of us should be doing, it’s smart to make the most of IRAs and 401(k)s, if you can. Here are some things to know.

IRAs come in two key varieties: traditional and Roth. With a traditional IRA, you put in pretax dollars and get an up-front tax break. So if you contribute, say, $7,000 to one in 2025, you’ll be able to deduct that $7,000 from your taxable income for 2025, shrinking your tax bill. When you withdraw money from your traditional IRA in retirement, that money will become taxable income.

Roth IRAs are funded with post-tax dollars, offering no up-front tax break. Contribute $7,000 in 2025, and you’ll get no 2025 tax break. But if you follow the rules, you’ll eventually be able to make withdrawals from your Roth IRA tax-free.

IRA contribution limits are $7,000 for 2025, with those 50 and older able to contribute an additional $1,000. The IRA contribution deadline for 2025 is April 15, 2026.

Meanwhile, 401(k) accounts — sponsored by employers — also exist in both traditional and Roth forms, but they have much larger contribution limits. For 2025, you can contribute up to $23,500, with most people 50 and older able to chip in $7,500 more and those aged 60 to 63 able to chip in an extra $11,250 instead. 401(k) plans frequently offer matching contributions from your employer. That’s free money, so aim to contribute at least enough to max out any available match.

With an IRA opened at a brokerage, you’ll be able to invest your contributions in just about any stock, as well as gobs of mutual funds and exchange-traded funds (ETFs). With a 401(k) account, though, your choices will be more limited. Typically, there will be a menu of funds to select from.

Chances are, you’ll be able to contribute to one or more IRAs as well as to your workplace 401(k) account, and perhaps invest in a regular taxable brokerage account as well. Read up on how to invest at Fool.com/investing/how-to-invest.

My smartest investment move was buying 12,000 shares of Amazon.com in 1999 and selling them in 2002 for an $800 profit. — W.S., online

The Fool responds: We hope you’re pulling our leg and that you’ve made even smarter investment moves since then. You did make a profit, which is certainly good. But as you surely know, had you hung on to those shares — or even a portion of them — you might be living on easy street.

Shares of Amazon.com debuted on the stock market in 1997 the usual way, via an initial public offering (IPO). The stock has split four times since then, with the last two splits occurring after Jan. 5, 1999. So had you hung on, your 12,000 shares would likely have split 2-for-1 in September 1999, becoming 24,000 shares — with their share prices reduced proportionately to result in the same total value. In June 2022, they would have split 20-for-1, turning into 480,000 shares (with the same total pre-split value). Today, with Amazon recently trading near $232 per share, 480,000 shares would be worth … more than $111 million! If Amazon’s shares had never split, they’d be too costly for most of us to buy.

(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)

I trace my roots back 188 years, to Cincinnati in 1837, when a British candlemaker and an Irish soapmaker joined forces. I supplied the Union Army during the Civil War. I introduced Ivory soap in 1879, Crisco shortening in 1911 and Tide detergent in 1946. I was an early sponsor of daytime radio serial dramas, leading them to become known as “soap operas.” I’ve paid a dividend for 135 years in a row and have hiked that payout for 69 consecutive years. My brands today include Bounty, Charmin, Crest, Dawn, Gain, Old Spice, Pampers, Pepto-Bismol, Swiffer and Tampax. Who am I?

I trace my roots back to 1957, when my founder bought a motel next to a Los Angeles airport. He and other family members helped grow me. In 1968, a separate internationally focused company was formed, and in 2004, I absorbed it and several other family businesses. Today, based in Chicago and with a recent market value near $14 billion, I’m a major hospitality specialist, recently sporting more than 1,450 hotels and resorts in 79 countries — with close to 350,000 rooms in all. One member of my founding family is the billionaire governor of Illinois. Who am I? (Answer: Hyatt Hotels)

Verizon Communications’ (NYSE: VZ) mobile and broadband businesses generate lots of recurring revenue as customers pay their bills. That provides the telecom giant with funds to expand its 5G and fiber networks and support its high-yielding dividend. The company expects to generate $17.5 billion to $18.5 billion in free cash flow this year after investing a similar amount in capital projects. That’s plenty of money to cover the roughly $11 billion per year Verizon spends on its lucrative dividend, which recently yielded 6.3%.

The company uses the cash it retains to strengthen its solid balance sheet. That gives it the financial flexibility to make acquisitions as the right opportunities arise. Last year, it agreed to acquire Frontier Communications in a $20 billion deal. The transaction will significantly enhance and streamline Verizon’s fiber operations, generating $500 million or more in projected annual cost savings.

Verizon’s growing business and strong free cash flow put it in an excellent position to continue increasing its high-yielding dividend.

Verizon’s stock may not grow rapidly, but it can still grow. The company is a leading telecom provider, and over time, consumers will upgrade their phones and plans, which can spark more revenue growth in the future. Buying Verizon stock today could prove to be a good move for the long term. (The Motley Fool recommends Verizon Communications.)